Starting 1 October 2025, employers must follow a new rule that requires contributions for eligible non-citizen staff. This change affects payroll, registration, and monthly remittances to the national provident fund.
Prime Minister Dato’ Seri Anwar Ibrahim announced the move to promote fair treatment and greater equity across the labor market. Employers now have a clear duty to register each eligible employee and to remit the required monthly payments on time.
Our team at Bispoint Group provides practical, tailored strategies to help your business transition smoothly. We focus on compliance steps, documentation, and cost planning so you can avoid penalties and stay focused on operations.
Key Takeaways
- Mandate begins on 1 October 2025 and covers eligible non-citizen staff.
- Employers must register and submit monthly contributions to the provident fund.
- The policy aims to improve fairness in the labor market.
- Bispoint Group offers tailored help for operational and financial changes.
- Act now to update payroll systems and avoid compliance risks.
Understanding the New EPF for Foreign Workers Malaysia Mandate
Effective 1 October 2025, a new rule requires employers to make monthly retirement contributions for eligible non-malaysian citizen employees. This change affects payroll setup, registration, and remittances.
The scope covers all non-malaysian citizen workers holding valid passports and work permits. Certain categories, such as domestic helpers, are excluded from the mandate.
Scope of the Ruling
- Who is covered: Non-malaysian citizen employees with valid work authorization.
- Who is excluded: Specified categories like domestic household staff.
- Start date: 1 October 2025 for employer compliance.
Purpose of the Policy
The government aims to boost fairness and align local practice with international labor norms. Finance Minister II Datuk Seri Amir Hamzah Azizan stated the move corrects cost imbalances between local and non-malaysian citizen staff.
| Item | Applies To | Contribution Rate | Notes |
|---|---|---|---|
| Mandatory payment | Non-malaysian citizen employees | Employer 2% / Employee 2% | Remit monthly to national fund |
| Exclusions | Domestic helpers, other exempt groups | Not applicable | Check eligibility lists |
| Policy goal | All citizen employees and non-citizen staff | — | Reduce capital outflows; support currency |
Legislative Background and the EPF Act
The Dewan Rakyat passed the Employees Provident Fund (Amendment) Bill 2025 on 6 March 2025, changing the legal basis for employer retirement payments. This update amends the epf act 1991 and aligns the statute with current labor needs.
The amendment makes certain employer-paid epf contributions mandatory for non-malaysian citizen staff who meet eligibility rules. Lawmakers moved participation from a voluntary arrangement to a formal, statutory requirement.
By revising the act 1991, legislators clarified the scope and duties of employers. The updated epf act now explicitly covers non-malaysian citizen individuals working under valid permits.
Key legal effects:
- Mandatory status for employer contributions for non-malaysian citizen employees.
- Clear statutory authority for the Board to manage accounts and withdrawal rules for citizen employees.
- Stronger enforcement paths for non-compliance tied to the amended epf act 1991.
Determining Eligibility for Non-Malaysian Citizen Employees
Start by confirming which staff meet the updated eligibility rules before making payroll changes.
Eligibility is straightforward but requires careful checks. Employers must verify that each non-malaysian citizen employee holds a valid passport work authorization and a valid work pass. This step avoids misclassification and penalties.
Certain pass types are included. These cover employees on an employment pass, a professional visitor pass, a student pass with work rights, a residence pass, and long-term social visit passes that permit work.
Valid Pass Types
- Employment pass holders with active permits.
- Professional visitor pass when work permission is granted.
- Student pass with approved work conditions.
- Residence and long-term social visit passes that allow employment.
- Contract service and contract service apprenticeship roles are reviewed by pass validity and job terms.
Employers must confirm that staff are not domestic helpers, who remain exempt. Keep records of immigration documents and update them regularly to show citizen employees valid status where needed.
| Check | Included | Notes |
|---|---|---|
| Valid passport and work pass | Yes | Required for every non-malaysian citizen employee |
| Domestic helpers | No | Exempt from subject epf contributions |
| Contract service / apprenticeship | Case-by-case | Assess based on work pass and contract terms |
Contribution Rates for Employers and Staff
A standardized 2% split applies to employer and employee portions of monthly salaries. The contribution rate is fixed at 2% for the employer share and 2% for the employee share of each worker’s monthly wages.
Employers must ensure the calculation employer employee portions are accurate so payroll meets the new contribute statutory rate. That means updating payroll formulas and testing sample payslips before the first remittance.
When preparing monthly payments, round totals to the rounded next ringgit rule used by the fund. This prevents small cents mismatches during uploads and reconciliation.
The employee contribution rate is deducted directly from the salary. The employer share is an additional business cost and must be recorded separately in accounts payable.
Keep clear records showing the employer/employee split for every pay period. Accurate logs and receipts make audits smoother and show compliance with the required epf contribution and contribution rate rules.
- Mandatory: 2% employer share + 2% employee share.
- Confirm payroll calculation employer employee before remittance.
- Apply rounded next ringgit for final submission.
Mandatory Registration Process for Foreign Workers
Setting up member records is the first practical step before you can submit monthly retirement contributions. Complete and accurate registration unlocks the ability to make epf contribution payments and keeps payroll clean.
Registration Steps
Step-by-step registration begins with collecting each worker’s passport work pass details. Employers may register online via i-Akaun or visit a local branch for in-person setup.
Required Documentation
Provide a clear copy of the passport work pass and the employee’s personal details. Keep scanned files ready for upload to speed verification.
Portal Access
Use i-Akaun to register epf members and to upload documents securely. Once registration is complete, the employer can contribute epf funds each month on behalf of the worker.
- Register all eligible non-malaysian citizen employees before any payment runs.
- Submit valid passport work pass details for each record.
- Confirm portal uploads and retain receipts for audits.
Managing Payroll Records and Compliance
Good recordkeeping turns a monthly remittance into a smooth, repeatable process. Treat each pay run as a compliance task so entries are accurate and auditable.
Employers need submit accurate payroll records every month to show both the employer share and the employee share have been calculated correctly. Keep a standard file for each non-malaysian citizen employee that holds passport and work pass details, payslip copies, and remittance receipts.
It is mandatory to deduct employee share from wages before final payment. While employers may deduct the employee portion, the business must also remit its full employer share on schedule.
- Log contribution amounts per pay period for every non-malaysian citizen worker.
- Store digital receipts and reconciliation reports to speed audits.
- Run a short payroll validation before monthly submission to catch errors.
Consistent practices reduce mistakes and protect your business. Clear records make it simple to prove compliance for each non-malaysian citizen employee when requested.
Deadlines for Monthly Contribution Payments
Set a firm internal calendar: the 15th of the following month is the payment cut-off. For example, contributions for October 2025 must be paid by 15 November 2025.
All monthly contributions must paid by that date to avoid penalties. Employers should prepare payroll, apply the correct contribution rate, and schedule the transfer well before the 15th.
Late payments can trigger fines and legal action under the current act. Keep clear records of submission receipts and reconciliation reports to show timely compliance.
- Automate reminders so epf contributions are processed ahead of the 15th.
- Validate payroll totals and the contribution rate before finalising transfers.
- Keep proof of payment and remittance files for audits and inquiries.
| Deadline | What to Submit | Example | Consequence if Late |
|---|---|---|---|
| 15th of following month | Monthly epf contributions and remittance file | Oct 2025 → due 15 Nov 2025 | Fines, interest, possible legal enforcement |
| Before payroll run | Payroll validation and contribution rate check | Run tests mid-month | Prevents shortfalls and reconciliation issues |
| Ongoing | Record retention (receipts, payslips) | Store 6–12 months digitally | Supports audits and dispute resolution |
Handling Withdrawals for Departing Employees
When a non-malaysian citizen leaves employment or the country, they may qualify to reclaim their savings. The Board allows full withdrawal in specific cases. Keep procedures clear to help staff and beneficiaries access funds fast.
Conditions for Full Withdrawal
Who can claim total contributions:
- A non-malaysian citizen who permanently leaves with no plan to return may withdraw their total contributions in full.
- If an employee passes away, designated beneficiaries can claim the accumulated balance.
- Workers who reach 55 years old or become incapacitated may also apply for full withdrawal.
The withdrawal process requires proof. Employers or claimants must submit termination evidence, an expired work permit, or a death certificate for cases where an employee passes away.
“Designated beneficiaries are entitled to the accumulated funds when the account holder dies or is legally incapacitated.”
| Trigger | Who Claims | Required Proof |
|---|---|---|
| Permanent departure | Non-malaysian citizen | Exit record or expired work permit |
| Account holder dies | Designated beneficiary | Death certificate and beneficiary ID |
| Reached retirement age | Account holder | Age proof (55 years old) and ID |
| Incapacity | Account holder or legal rep | Medical evidence and legal documents |
Impact on Business Expenditure and Operational Costs
New statutory payments add a predictable, ongoing cost to hiring non-malaysian citizen personnel.
Businesses will face higher monthly payroll expenses because of the required epf contribution. Companies that employ non-malaysian citizen employees must factor the employer share into annual budgets.
The contribution rate is fixed at 2% for the employer portion and a matching 2% for the worker. Plan for this employer employee split when forecasting headcount costs.
Finance Minister II Datuk Seri Amir Hamzah Azizan noted the change aims to encourage hiring citizen employees over time. The policy raises the cost of hiring non-malaysian citizen staff to promote a fairer labour market.
Perform a focused financial review to model scenarios. Test different hiring mixes, adjust pricing, and refresh cashflow projections so long-term profitability and operational strategy remain sound.
- Recalculate annual payroll with the 2% employer share included.
- Track epf contribution totals per pay period for each non-malaysian citizen employee.
- Use forecasts to compare costs of non-malaysian citizen hires versus citizen employees.
Distinguishing Between Eligible Workers and Domestic Helpers
Clear staff categorization protects businesses and ensures correct contributions. Employers must separate household help from standard hires when assessing liability under the new rules.
Domestic helpers — such as maids, cooks, gardeners, cleaners, babysitters, and drivers — are explicitly excluding domestic workers from mandatory contributions. Treat these roles as exempt unless their contract shows otherwise.
By contrast, staff in a contract service role that are not household help are generally subject epf participants. That includes employees on fixed-term agreements, outsourced technical staff, and in-house contractors who perform regular duties.
Businesses should review any contract service apprenticeship or service apprenticeship arrangements carefully. A trainee or apprentice may be classified as employed under a contract service if work terms and pass types meet the eligibility tests.
| Category | Typical Examples | Contribution Status |
|---|---|---|
| Domestic helper | Maids, cooks, gardeners, babysitters | Exempt (excluding domestic workers) |
| Employed contract service | Outsourced staff, fixed-term hires | Usually subject epf |
| Contract service apprenticeship | Trainees with work duties | Assess case-by-case |
Aligning with International Labor Standards
Bringing national law in step with ILO guidance clarifies the intent behind recent legislative updates.
The amendments to the epf act 1991 show a clear policy aim: equal treatment and wider social protection for all legally employed staff.
By making epf contributions mandatory for eligible non-citizen hires, the government follows the International Labour Organisation’s call to equalise labour terms. This helps reduce informal hiring and protects pay and benefits.
The revised epf act also supports broader economic goals. It underpins plans to build a high-income nation by improving social security, encouraging sustainable wage growth, and curbing undocumented employment.
Employers benefit from clearer rules and a robust compliance framework under the updated epf act. That framework makes it easier to manage payroll, recordkeeping, and lawful hiring practices.
- Supports fair treatment and social protection for legally employed staff.
- Encourages sustainable wage growth and employment transparency.
- Strengthens compliance through clearer statutory obligations.
Consequences of Non-Compliance for Employers
Non-compliance with the act 1991 often leads to costly penalties under the third schedule. Regulators can impose fines and require back payments when employers fail to register eligible staff or miss remittances.
Failure to register workers may trigger prosecution as set out in the second schedule. That step can include criminal charges, administrative fines, and orders for corrective action.
The rules intersect with the compensation act 1952 and related workmen compensation provisions. Employers must review obligations according section workmen and align internal policies to avoid disputes over benefits and claims.
“Clear records and timely remittances are the simplest way to avoid enforcement and costly litigation.”
| Risk | Possible Outcome | Reference |
|---|---|---|
| Not registering employees | Prosecution, fines | Second schedule |
| Missed contributions | Back payments, penalties | Third schedule |
| Benefit disputes | Compensation claims | Compensation Act 1952 |
Action tip: review payroll, keep clear records, and update internal policies to meet section workmen compensation rules and reduce enforcement risk.
Transitioning Existing Voluntary Contributions
Employees who chose voluntary contributions before will be moved to the new statutory rate without extra action from them. For staff who opted in on or after 1 August 1998, payroll will automatically set the employer share to 2% and the employee share to 2%.
What employers should do:
- Inform any staff who were mencarum melebihi kadar that their rate will standardize to the 2% employer / 2% employee split.
- Update payroll rules so voluntary top-ups are reviewed and adjusted to meet the new law.
- Document the change and keep a dated record of notifications and system updates.
The transition will take effect from 1 October 2025. Any arrangements where employees paid melebihi kadar berkanun will be aligned to the mandate. Employers must also confirm that systems used to contribute epf accept the new contribution codes and rounding rules.
Carry out a quick payroll test run and notify affected staff. A smooth update protects both the business and staff, and helps avoid remittance errors when you next contribute epf.
Utilizing the i-Akaun Portal for Administration
Use the i‑Akaun portal as your central hub to manage member details, run validations, and monitor contribution trends.
The portal shows real‑time account balances and the current dividend rate. Employers can check totals quickly and confirm that monthly payments posted correctly.
You can update member details, print registration documents, and download remittance receipts directly from the dashboard. These tools speed up audits and reduce manual errors.
Familiarize your team with the full user guide on i‑Akaun. The guide explains batch uploads, report exports, and how to view the yearly dividend rate.
Make a habit of regular portal checks. A weekly review helps catch mismatches early and keeps records accurate. Routine use also alerts you to system updates or changes in the dividend rate.
- Monitor balances and contributions in real time.
- Print and archive registration and remittance files.
- Follow the portal user guide to improve workflow efficiency.
Strategic Advisory for Future-Ready Businesses
Practical advice can turn compliance obligations into cost controls and growth levers. At Bispoint Group, we blend regulatory know-how with operational insight to make that happen.
Our consultants work side-by-side with your team to create clear compliance roadmaps. We focus on payroll, remittance flows, and HR processes so your operations stay efficient and auditable.
We deliver tailored solutions that reflect your industry, size, and hiring mix. That includes scenario modelling, cashflow impact reviews, and step-by-step implementation plans.
Our goal is simple: keep you compliant without slowing growth. We help reduce risk, lower unexpected costs, and free leaders to focus on strategy.
“Professional advisory helps businesses adapt quickly while preserving competitiveness.”
- Compliance roadmaps integrated with payroll systems.
- Practical training for HR and finance teams.
- Ongoing support for audits and regulatory queries.
Discover how our professional advisory services drive sustainable success. Let us manage the regulatory details so you can concentrate on scaling your business.
Conclusion
To finish, focus on simple processes that secure payroll accuracy and reduce regulatory risk.
Key action: register eligible staff, apply the 2% employer and 2% employee rate, and keep clear remittance proof.
These changes mark a major policy shift starting 1 October 2025. Employers who stay organised help build a fairer labour market and support the national goal of higher income status.
We answered every frequently asked question in this guide and compiled common concerns into a dedicated FAQ. If you still have a frequently asked question, check the frequently asked questions section or contact our advisory team for tailored help.
